Entp Finall - Dhirubhai Ambani

"DHIRUBHAI AMBANI & HIS WAR AGAINST
THE INDIAN CLOSED ECONOMY"

By
Dolly Basantani – 06
Swati Dadheech – 09
Nehal Kotecha – 38
Hitesh Mulchandani – 60
Prof. Minu Mehta

Entrepreneurship
“INDIA SHINING”…
India’s Ranking in Doing Business 2008
Starting a Business -111
Dealing with Licenses -134
Employing Workers -85
Registering Property -112
Paying Taxes -165
Trading Across Borders- 79
Enforcing Contracts -177
Closing a Business -137
(Source: Doing Business, World Bank, 2008)

NOT SO SHINING….
The Industrial policy resolution – “Industrialization under
government regulation”
Wide Array Of Physical Controls

Industrial Licensing
Public Sector Policy
FERA
MRTP Act
Industrial Location Policy
“We killed at birth any hope for an industrial
revolution…”
Unnecessary Govt. Interference
Delays In Investment Decisions
Bureaucratic Red Tapism
Corruption
Fostered Monopolies
Encouraged Uneconomic-scale Plants
Second-rate Technology
Uncompetitive Locations
Discouraged The Entry Of Efficient And Honest
Entrants
The world, they say, steps aside for the man
who knows where he is going
A man far ahead of his times, he epitomized the dauntless

entrepreneurial spirit
 Dared to dream on a scale unimaginable before in Indian

industry.
Backed by confidence, courage and conviction, man can

achieve the impossible
From a humble beginning, he went on to create an enviable

business empire within a span of just 25 years
The Rs.60,000 crore Reliance Group is a living testimony to

his indomitable will, single-minded dedication and an
unrelenting commitment to his goals
The Start..
 Born at Chorwad, in the district of Junagarh in the western Indian state
of Gujarat
 Son of a petty trader from a remote village in rural Gujarat, Dhirajlal

Hirachand Ambani
 Entrepreneurship in blood
 Once procured a tin of groundnut oil on credit from a local whole

seller and sold the oil in retail sitting on the roadside, earning a
profit of a few rupees that he gave to his mother
 Began setting up bhajia or onion and potato fries stalls at village

fairs during weekends when his school was closed
Start of a historical journey…
 Moved to Aden as a teenager in order to seek his fortune.
 Started work as a petrol station attendant
 Took up a clerical position for an oil company that was the

sole distributor of Shell products there.
 This was the era of India’s infamous “license-permit raj”,

when businessmen with political connections could corner
export, import and manufacturing licenses and accumulate
huge fortunes.
Contd…
To learn the tricks of the trade he offered to work free for a Gujarati
trading firm
Learnt accounting, book keeping, preparing shipping papers an

documents, and dealing with banks and insurance companies
Began speculating in high seas purchase and sales of all sorts of goods
Borrowed as much as he could from friends and small Aden

shopkeepers
 "Profit we share and all loss will be mine" became his motto
Back To India
Towards the end of 1958 Dhirubhai landed at Bombay with little money in his pocket
Launched himself as a trader in spice setting up office under the name of Reliance
Commercial Corporation
Government scheme in the mid-sixties for import of nylon yarn, then much in demand,
against export of rayon fabrics
He took to export of rayon fabrics in right earnest
Began playing with the idea of establishing his own independent manufacturing unit
Opportunity in the textile industry — higher disposable incomes were leading to Indians
buying better, more expensive clothes
Thus sought and received the necessary clearances to manufacture cloth from polyester fibre .
 Rather than turning to the banking system, he decided to tap the Bombay Stock
exchange.
 Reliance Industries, which went public in 1977 with one of the largest public offerings of
its time
 Subsequently diversified into chemicals, gas, petrochemicals, plastics, power and

telecom services
 Had a keen sense of business with a razor-sharp ability to negotiate through the Indian
political system
 He is credited to have brought about the equity cult in India in the late seventies and is
regarded as an icon for enterprise in India
What led to the growth..?
 By the late 1980s the Reliance group was one of India’s most influential and
profitable concerns.
 The phenomenal growth of Reliance owed to :

 Ambani’s acumen and
 to the ease with which he was able to get official rules and regulations —
including import tariffs — introduced, amended or scrapped in order to
undercut his rivals and push his own business interests.
 His methods earned him many bitter enemies in India’s corporate world.
 Ambani nevertheless forged ahead, cultivating friends in virtually every Indian

political party and managing the media in such a way that critical stories about
Reliance’s unconventional business methods seldom made it into the
newspapers.
I M - POSSIBLE…
Set up a Polyester Fibre Yarn factory with a capacity of 10,000
tonnes – the entire market in India – only 6000 tonnes
Unusual theory – believed in providing supply – which created

demand automatically
In 1990’s BJP government weakened – Ambani managed – stay

from the proceedings of the custom cases – Congress Party
With the support of West Bengal Chief Minister Jyoti Basu –

set up a big new polyester factory in the state – Reliance Bengal
I M - POSSIBLE…
Converted the non convertible portion of the
debentures into equity & reserves – legally impossible
Because of this brilliant and unconventional move

instead of an annual interest bill of Rs.96.5 m –
dividend burden was only Rs. 36 m
With this step, reliance made significant contribution

to the growth of the debenture market through its
successive issues of convertible debentures
I M - POSSIBLE…
 Dhirubhai’s cultivation of indira & other congress members
during janata period
 In October 1980, reliance received one of three licenses
given by govt for manufacture of polyester filament yarn,
the location being stipulated as backward area of
Patalganga in hills of Maharashtra
 In the field of 43 contestants for the licenses, reliance beat

many larger and longer established business houses
including Birla
 Negotiated permits from govt to import technology from du

pont, American chemicals giant in US for its polyester
Criticism
Despite his almost Midas Touch, Ambani known for flexible values and
an unethical streak running through him
His biographer himself has cited some instances of his unethical

behavior when he was just an ordinary employee at a petrol pump in
Dubai.
Accused of having manipulated government policies to suit his own

needs, and has been known to be a king-maker in government elections.
 Although most media sources tend to speak out about business-politics

nexus, the Ambani house has always enjoyed more protection and shelter
from the media storms that sweep across the country.
Some of his quotes…
Truly men like Dhirubhai Ambani are rare.
They come gifted with the power and the vision to change
nations, to alter the course of corporate history.
They are the empire builders, the stuff that legends are
made of.
The legend called Dhirubhai Ambani will never die. His

spirit will live on forever.
THANK YOU

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"DHIRUBHAI AMBANI & HIS WAR AGAINST

THE INDIAN CLOSED ECONOMY"

Prof. Minu Mehta

(Source: Doing Business, World Bank, 2008)

Wide Array Of Physical Controls

A man far ahead of his times, he epitomized the dauntless

 Dared to dream on a scale unimaginable before in Indian

Backed by confidence, courage and conviction, man can

From a humble beginning, he went on to create an enviable

The Rs.60,000 crore Reliance Group is a living testimony to

 Son of a petty trader from a remote village in rural Gujarat, Dhirajlal

 Once procured a tin of groundnut oil on credit from a local whole

 Began setting up bhajia or onion and potato fries stalls at village

 Started work as a petrol station attendant

 Took up a clerical position for an oil company that was the

 This was the era of India’s infamous “license-permit raj”,

Learnt accounting, book keeping, preparing shipping papers an

Borrowed as much as he could from friends and small Aden

He took to export of rayon fabrics in right earnest

 Subsequently diversified into chemicals, gas, petrochemicals, plastics, power and

 The phenomenal growth of Reliance owed to :

 Ambani nevertheless forged ahead, cultivating friends in virtually every Indian

Unusual theory – believed in providing supply – which created

In 1990’s BJP government weakened – Ambani managed – stay

With the support of West Bengal Chief Minister Jyoti Basu –

Because of this brilliant and unconventional move

With this step, reliance made significant contribution

 In the field of 43 contestants for the licenses, reliance beat

 Negotiated permits from govt to import technology from du

His biographer himself has cited some instances of his unethical

Accused of having manipulated government policies to suit his own

 Although most media sources tend to speak out about business-politics

The legend called Dhirubhai Ambani will never die. His

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